Private ancillary funds

Transcription

1 Private ancillary funds

2 Your vision Your contribution Your legacy Create a meaningful, philanthropic legacy with an AET private ancillary fund. Do you want to create a personalised, effective and everlasting giving program? Understandably, philanthropists want their donations to be effective and sustainable over the long term. As a donor with the desire and capacity to provide generous support, choosing the right structure for charitable giving is crucial. Our Australian Executor Trustees Limited (AET) private ancillary fund (PAF) enables individuals and families to establish long-term, personalised charitable giving programs that are not only effective, but also meet all the legal and taxation requirements associated with charitable donations. Why partner with us? We have been partnering with philanthropists and their advisers for more than 130 years to help them achieve sustainable and effective philanthropy. As one of Australia s leading providers of charitable trustee services, we have the knowledge, expertise and proven track record to successfully establish, administer and manage private ancillary funds. What is a PAF? A PAF is a charitable trust that allows you to create your own personalised giving program during your lifetime and which continues after your death. It is a private fund through which you make tax-deductible donations to support your nominated charities, rather than making one-off donations. Funding is provided in your name, or your family s name, to support charities you nominate forever. These donations are then prudently invested, effectively managed and wisely distributed to your nominated charitable organisation(s). Many donors use a PAF to engender a sense of social responsibility within their family and to establish a tradition of giving. PAFs can support advisory committees and are ideal vehicles to engage others in your giving. In so doing, you are able to share your passion for philanthropy with current and future generations of your family, friends and/or associates. By establishing a PAF, you can focus principally on the pleasure of giving and be sure that your fund is managed prudently and efficiently in the future. 2

3 AET Private PAF ancillary Client Guide funds Is a private ancillary fund right for me? A PAF is an appropriate philanthropic structure if you: want to establish a long-term personalised giving program want to be involved in the investment management and/or distribution/gifting decisions want your philanthropy to be effective over the long term want to involve family members and future generations in your passion for philanthropy. 3

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5 AET Private ancillary funds Your private ancillary fund Establishing a PAF With our guidance and expertise, establishing a PAF is a straightforward process. Simply complete an AET PAF application form and return it to us. We will then work with you and your adviser to establish the PAF and put the necessary governance structures in place to ensure your PAF operates smoothly in the future. Each PAF requires its own trust deed and investment strategy. Once these documents are created, we will arrange for them to be lodged with the appropriate government agencies to be endorsed for tax concessions. Selecting a trustee The trustee of a PAF cannot be an individual; it must be a corporation. The directors of the corporate trustee must include at least one party who meets the definition of a responsible person and is actively involved in the decision making of the PAF. The responsible person cannot be the founder, a major donor or an associate thereof. A corporate trustee must adhere to prescribed guidelines and those who fail to comply are in breach of strict Australian Taxation Office (ATO) requirements. It also needs to keep abreast of both the common law principles of trust law and the Trustee Act of the State or Territory in which the fund operates. We recommend our clients appoint AET PAF Pty Ltd, a subsidiary of AET, as the sole trustee of their PAF. Making contributions Contributions to your PAF are irrevocable donations and can be made by you (as the founding donor) or your family or friends. There is no restriction on the value or frequency of additional contributions to your PAF and many donors elect to leave some or all their estate to their PAF. However, your PAF is prohibited from actively soliciting funds from the public. Selecting recipient charities While you can nominate as many charitable organisations as you like to be recipients of distributions from your PAF, gifts cannot be made to an organisation that may, in some way, benefit the contributors or the founder of the PAF. Beneficiaries must be registered as a deductible gift recipient Item 1 entity by the ATO. The trustee of your PAF is responsible for ensuring grants are compliant and can also assist you with establishing and implementing a clear and structured granting strategy that will help you achieve your philanthropic goals. Making grants Once you have selected which eligible charitable organisations you would like your PAF to support, the trustee is responsible for organising and managing the grants to your nominated charities. Your PAF must distribute at least five per cent of the net asset value of the fund as at the previous 30 June or $11,000 (whichever is greater). Where AET PAF Pty Ltd is appointed trustee, the minimum single grant you can make from your PAF is $1,000. Investments A PAF is usually established to run in perpetuity, therefore its assets will generally be invested conservatively to meet its investment objectives over the long term. By law, your adviser is required to develop an investment strategy that states your objectives and is tailored for the PAF s risk profile. The trustee is required to undertake an annual review of the investments and prepare financial statements that are lodged with relevant government agencies. Please note that by law, your PAF cannot hold certain asset classes (for example collectibles such as artwork). 5

6 Tax advantages All donations made to your PAF are 100% tax-deductible. Tax deductions can be apportioned over five years from the date of the initial donation. Ongoing administration, reporting and online access to your account The trustee is responsible for the ongoing administration of your PAF including the maintenance of all transaction records, meeting minutes (including funding and investment decisions), audits and the lodgment of all regulatory reporting. We will provide these services. You can access relevant documents at all times via our online portal, AET My Portfolio, including: quarterly investment reports annual donor statements financial statements and audit reports tax-deductible receipts. Fees and costs Establishment fee In providing professional trustee services for a PAF, an establishment fee of up to $4,000 (plus GST) is charged to cover the following: Arranging for the preparation of the trust deed (including stamping of the deed where necessary). Lodging the PAF application with the ATO including applying for an Australian Business Number (ABN) and DGR status. Applying for income tax-exemption endorsement and completing an Agreement to Comply with PAF Guidelines. Registering the PAF with the Australian Charities and Not for Profit Commission (ACNC). Ongoing fee The annual trustee fee charged is 0.50% (plus GST) of the gross asset value of your PAF, with a minimum fee of $4,000 (plus GST) per annum. Please note that your adviser may charge you additional investment advice fees and management fees and costs may also apply. 6

7 AET Private ancillary funds Need more information? If you would like more information on establishing a PAF, please contact your financial adviser. Alternatively, please contact your AET business development manager on , paf@aetlimited.com.au or visit our website 7

8 Australian Executor Trustees Limited ABN AFSL Part of the IOOF group TRA-2096